May 6, 2014
Juergen Baetz, The Associated Press

BRUSSELS – A group of ten European Union countries has agreed to introduce a financial transaction tax from 2016 onward, in an effort to curb speculation and claw back revenues after governments had to bail out banks.

The nations — including economic heavyweights Germany, France, Italy and Spain — will initially tax only the trading of shares and some derivatives, according to a joint statement published Tuesday on the sidelines of a meeting of the 28-nation bloc’s finance ministers.

The levy’s scope won’t be as broad as supporters initially hoped, but the countries said they hope to reach agreement on a tax that would include trading in most financial products later on.

Austrian Finance Minister Michael Spindelegger, who played a leading role in the tax negotiations, said the group will now work to overcome remaining practical hurdles to finalize the legislation by the end of this year.

European officials started pushing for the tax following the 2008-09 financial crisis when governments had to spend hundreds of billions of taxpayer money for bailouts to avoid a complete meltdown of the financial system. Still, they failed to muster the required unanimity for an EU-wide solution.

Britain, which is home to the bloc’s biggest financial hub, the City of London, is strongly opposed to the plan, saying it’s a populist measure that will harm the economy and undermine banks’ global competitiveness.

“It’s not a tax on bankers, it’s a tax on job on investment, on people’s pensions. That’s why the United Kingdom does not want to be a part of it,” U.K. treasury chief George Osborne said.

But German Finance Minister Wolfgang Schaeuble voiced optimism that a successful introduction of the tax will create pressure for the 17 EU countries currently not participating to join in later.

Slovenia previously pledged to introduce the tax as well, making it the 11th member of the group, but its finance minister didn’t sign Tuesday’s statement because his government resigned Monday.

Campaigners in favour of what is sometimes referred to as “Robin Hood Tax” said the EU nations’ proposal wasn’t ambitious enough. Charity Oxfam insisted the “compromise does not yet … ensure that the financial sector is finally made to pay its fair share of tax.”

Germany’s Schaeuble acknowledged the scope of the current proposal wasn’t as broad as hoped, but said it was better than an elusive pursuit of a perfect deal everybody would sign up to in a distant future.

“The least ideal solution is that we’re all in favour (of a tax) but we don’t get it done,” he said.

Britain’s Osborne, meanwhile, denounced the lack of detail of the current tax proposal and threatened Britain would challenge any financial transaction tax if it were to affect also EU economies not participating.

“If they seek to damage jobs and investment across the rest of Europe, then we are entitled to challenge that,” he insisted.

The EU’s top court last week dismissed a British challenge to the introduction of the tax as premature since the tax has yet to be established. Britain argued it is illegal under EU law since it would affect even countries who don’t sign up to it.